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Rains drive inflation to five-year low

Zachary Ochuodho @zachuodho

Improved rains and strong shilling helped reduce inflation rate to 3.73 per cent in April, the lowest rate since January 2013.

Kenya National Bureau of Statistics (KNBS) said the rate has continued to decline in recent months mainly due to improved food production and strengthening of the shilling currency against the dollar.

Zachary Mwangi, the statistics body’s director general, said all indices dropped apart from housing, water, electricity, gas and other fuels’ index which increased by 3.24 per cent in April compared to 3.78 per cent in March 2018. Mwangi said there was a significant increase in prices of cooking fuels, with charcoal recording the highest increase of 16.87 per cent.

The new figures come against the backdrop of Monetary Policy Committee – which when cutting the Central Bank of Kenya (CBK)’s benchmark lending rate by 50 basis points in March said “inflation was well anchored”.

Data from the statistics office indicates that between March and April, food and non-alcoho1ic drinks’ index increased by 1.59 per cent, which was mainly due to increase in prices of some foodstuffs outweighing decreases recorded in respect of others.

“The year-on-year food inflation decreased to 0.26 per cent in April from 2.19 per cent the previous month,” a statement signed by Mwangi said. For the last one year, the inflation rate has continued to decline steadily for the reasons attributed to a rise in the prices of some foodstuff which was high last year due to prolonged drought.

Drop in inflation means the cost of living falls within CBK’s desired range of between 2.5 per cent and 7.5 per cent. Low inflation rate was last witnessed in February 2011 when it stood at 4.05 per cent. In March, inflation rate hit the lowest level in seven years to settle at 4.18 per cent down from 4.46 in February.

The data indicates that the changes in the price level of a market basket of consumer goods and services purchased by households, commonly referred to as consumer price index (CPI) increased by 1.35 per cent from 190.62 in March to 193.18 last month.

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